While Singapore is already the biggest foreign exchange (FX or Forex) centre in the Asia-Pacific region, it’s about to get another major boost. The American multinational bank Citigroup recently announced that it will be joining forces with Swiss multinational UBS AG to launch a foreign exchange pricing and trading platform in the heart of the city.
This would be the fourth such “currency trading engine” in Citigroup’s global roster, with similar such platforms already existing in New York, London, and Tokyo. At the same time, the company plans to greatly expand its e-trading infrastructure across the city, a move which should significantly boost liquidity and potentially add hundreds of jobs to Singapore’s financial sector.
The other three cities where Citigroup’s hubs are located are widely considered to be the main “command centres” of the global economy. The decision to base their fourth hub in Singapore over say, Hong Kong or Paris, represents a strong endorsement of Singapore’s financial services industry and its capability to handle such massive volumes of foreign currency trade.
While the financial sectors of Hong Kong and Singapore have been battling it out neck-and-neck over the past few years, it has generally been accepted that Singapore is taking the lead now. It also helps that Singapore is one of the largest foreign exchange centres in the world, with an average daily trading volume of around $517 billion, compared to Hong Kong’s $437 billion.
While it is unsurprising that Singapore has been selected as the premier FX hub in the region, Citigroup will be entering a crowded room. Dozens of forex platforms and brokerages already exist across the city, many of which are already considered some of the best in the world.
Singapore’s reputation as one of the most economically-free places on the planet, as well as an advantageous time-zone and high amounts of tech-readiness, have meant that foreign exchange traders are already spoilt for choice in this city. Citigroup’s new platform will, of course, be bringing something new to the table.
The entire engine will be built in-house by Citigroup and will include a propriety pricing and hedging algorithm through which clients can deal directly. When it goes live in the fourth quarter of this year it will offer a total of 23 spot currencies, including all of the “Group of Ten” currencies, as well as trading in gold and silver.
The platform aims to utilize the advantageous Asian trading hours offered by Singapore to offer prices to clients across the Asia-Pacific region. The platform will likely bolster SG’s reputation as a world leader in fin-tech trading services, whilst ensuring that the country continues to be the Asian epicentre of foreign exchange.
There are a total of 400 fin-tech firms already operating across Singapore, as well as being home to the world’s largest financial technology festival, FinTech Singapore, which was attended by over 40,000 people last year.
Judging by the success of Citi’s other FX trading platforms in New York, London, and Tokyo, it is likely that their latest Asian venture will prove a hit among traders.